Jahressteuergesetz 2018

Accounting Directive-Implementation Act

Developments so far

  • 03.2015: 1st passage Federal Council
  • 02.2015: 1st reading Federal Parliament
  • 01.2015: Federal Government approves draft bill
  • 07.2014: Draft bill published

The Federal Government approved a draft for an Accounting Directive-Implementation Act on 7.1.2015. The draft bill submitted by the Federal Minister of Justice and Consumer Protection (BMJ) aims to provide relief for smaller companies from accounting requirements. The draft also allows for new reporting obligations for certain large companies in the raw material sector concerning their payments to government agencies.

Background: On 26.6.2013, the European Parliament and Council passed the Directive 2013/34/EU (“Accounting Directive“ or “Annual Financial Statement Directive”). The EU member states are required to implement this new Directive into national law by 20.7.2015.

In this connection, the above-mentioned draft bill lists among other things

  • The draft bill provides for limited changes to the accounting rules and regulations of the German Commercial Code HGB in order to implement the specifications of Directive 2013/34/EU.
  • The draft bill particularly exercises the option to increase the thresholds for the classification of small, medium-sized and large corporations as well as medium-sized and large corporate groups. The purpose of this is to reduce the bureaucratic burden for smaller corporations and corporate groups as these will be exempt from certain size-dependent stipulations which resulted from the previous thresholds.
  • The draft bill also provides for the reduction in the notes to the financial statements, especially for small corporations. In accordance with Directive 2013/34/EU, there will be no need for such notes to the financial statement which are typically only needed to be able to understand larger corporations.
  • Further simplifications are also proposed, one of the main ones being the reintroduction of the option of the separate list of shareholdings.
  • Directive 2013/34/EU also requires new regulations for the transparency of companies in the raw material sector concerning payments to government agencies for which there has so far been no equivalent in the German Commercial Code.

Note: German accounting law has already been modernised by the Accounting Law Modernisation Act of 25.5.2009 (BilMoG). The draft bill therefore only provides for very limited changes beyond the implementation of the Directive. They involve individual clarifications and improvements of accounting rules to simplify the application of rules and to increase comparability of financial reporting.  It is worth highlighting the harmonisation of rules for the exemption of certain subsidiaries from accounting obligations when they are included in consolidated statements (changes from Article 264 paragraph 3 and 4 as well as Article 264b German Commercial Code HGB) and the simplification of rules in Article 292 German Commercial Code HGB and the abolition of the consolidated financial statement exemption regulation.

Note: The Federal Council recently reproved the additional costs to be feared for industry and state tax authorities when implementing the EU Accounting Directive (German Parliament document 18/4351). According to this, the Federal Council sees a risk that through the retrospective applicability of the rule of restructuring of balance sheet and profit and loss account, more compliance costs and more costs for industry and the authorities will arise than the Federal Government and National Regulatory Control Council  had originally indicated. The Federal Council proposes to apply the regulations planned in the draft uniformly for financial years commencing after 31.12.2015. The option is to be deleted accordingly. In its counter-statement, the Federal Government announced it would investigate to see whether the proposal could be implemented.